2 weeks Ago By Simply Wall St.
Over the past year, many ( ) insiders sold a significant stake in the company which may have piqued investors' interest. When analyzing insider transactions, it is usually more valuable to know whether insiders are buying versus knowing if they are selling, as the latter sends an ambiguous message. However, if numerous insiders are selling, shareholders should investigate more.
Although we don't think shareholders should simply follow insider transactions, we would consider it foolish to ignore insider transactions altogether. Over the last year, we can see that the biggest insider sale was by the insider, Alfred Kelly, for US$3.5m worth of shares, at about US$236 per share.
So it's clear an insider wanted to take some cash off the table, even below the current price of US$292. When an insider sells below the current price, it suggests that they considered that lower price to be fair. That makes us wonder what they think of the (higher) recent valuation.
However, while insider selling is sometimes discouraging, it's only a weak signal. We note that the biggest single sale was only 9.7% of Alfred Kelly's holding.
Insiders in Visa didn't buy any shares in the last year. You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. If you want to know exactly who sold, for how much, and when, simply click on the graph below! For those who like to find this Over the last three months, we've seen significant insider selling at Visa.
In total, Vice Chair Kelly Tullier dumped US$2.7m worth of shares in that time, and we didn't record any purchases whatsoever. Overall this makes us a bit cautious, but it's not the be all and end all.
Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. We usually like to see fairly high levels of insider ownership. Visa insiders own 0.
05% of the company, currently worth about US$267m based on the recent share price. This kind of significant ownership by insiders does generally increase the chance that the company is run in the interest of all shareholders. An insider sold stock recently, but they haven't been buying.
Looking to the last twelve months, our data doesn't show any insider buying. But it is good to see that Visa is growing earnings. The company boasts high insider ownership, but we're a little hesitant, given the history of share sales.
So while it's helpful to know what insiders are doing in terms of buying or selling, it's also helpful to know the risks that a particular company is facing. While conducting our analysis, we found that Visa has and it would be unwise to ignore it. If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this.
